Health Benefit Solutions

      Woodworking shop owners discuss their experiences trying to provide employee health insurance benefits. March 5, 2008

Question
Please don't take this as a gripe, because I like my job, and am compensated well for it. But I work in a 20 man commercial shop that offers just a paycheck, paid holiday, and vacation. It never really bothered me before, but now I'm in a different position (pregnant wife). I've looked around and I see other businesses this size that are offering 401k, medical, dental. I guess what I'm asking is, if you're a business owner of this size (15-25 employees), could you tell me what you offer as an employer? Also, I'm up in the ranks high enough where I may be able to push this a bit. I really feel that we may need to offer this to get the people we want to help grow the company. Thanks for your time.

Forum Responses
(Business and Management Forum)
From contributor V:
1. We (having 1 successful business) just bought an existing cabinet shop. We called in the folks to set up group insurance. Not enough wanted to pay for it, so now we don't offer it.

2. Many times, group rates are higher than getting your own policy, even with the employer kicking in. I noticed this when my ex, who was an RN, worked for a hospital and we had insurance through them. After she left there, we had to go out and get our own policy. We went to the same company and got policies cheaper than what her portion of the group rate was. So for a long time I thought most owners were just lying about what the part they were actually paying was. One of the owners here used to work for a fortune 500 company as head of records department. I asked him about it and he said for group policies, people with a lot of health issues get insurance at a cheaper rate, but those who don't have issues pay a higher price because of those that have problems.

3. You said you were well compensated. Of all "the other shops" that offer the extra benefits, you might find that they actually end up paying for it with a lower wage and more deductions.

I have found that, while these things sound good, most employees are not willing to sacrifice their bottom line to get them.



From contributor A:
We have nine people in the company, and pay for the employee's health insurance - a good PPO policy. The employee can add dependents as a payroll (before tax) deduction.
One single guy costs us $122.00/mo. Another with a few health issues costs $900.00/mo. A third with spouse and 2 children, spouse is of childbearing age, is about $1300.00/mo. One guy and wife with health issues is near 1500.00/mo (Yes, that is $8.57 per hour!!). Our total bill is $4200.00 per month. Any health problems are paid for by the small group in premiums.

I can rant and rave, and dream about what I could do with this money (raises for everyone, new equipment, retirement, etc.) but I am powerless. Ever since the insurance people learned how to convert power and profit from the docs and providers in a totally unregulated, profit driven environment, we pay. Until the people figure this out, we are collectively screwed.

I am forced to try to screen for health issues when hiring. While I want a guy with a wife and mortgage (must work, right?), he is also going to balk at the deduction for his family. The catch 22 is hard at work, funded by small business.



From contributor S:
The upside to providing affordable health care to your employees is that they will have better attitudes and be in generally better health than if you don't. We found a good insurance agent who found us a good program (45+ employees). We pay 80% of the cheapest policy, which most of the young people take, and they only pay about $14 a month or so out of pocket. The others upgrade out of their own pockets, but it is still very affordable compared to our previous offerings. Our participation has gone from around 30% to almost 100%. The few that didn't sign up have insurance through their spouses, so now everyone is covered. The key was finding a good agent we could work with.


From contributor A:
The key is the group size. Somewhere over 30 people, you can join into a larger group where the premiums are fairly shared, therefore the word "affordable" can be used. For the smaller than 30 - or whatever that count is - you are your own small group, and all costs are born within the group.

I once worked for a shop where we paid our own premiums, at that time about 60.00/month. Once one guy's wife got a kidney transplant, my premium went up to about 50.00 more per week than I made! Everybody dropped out of the insurance except for the kidney transplant guy, and then he had to bear the full cost - about 6 times his weekly pay! Ah, the joys of controlled market capitalism!



From contributor G:
We have 6 of 10 employees on BC/BS and the cost is $300 a month single, $600 couple, and $900 family. I pay for 70% of the premium but just this week told the 2 people with family plans that we were paying only 50%. Still is $450 a month vs paying $210 for the singles. My premiums have gone up 50% in the last 5 years. This little business has survived for 25 years, but if I don't get some cost controls in place, then it won't last many more. I am hearing of more competitors cutting health coverage than adding it.


From contributor J:
My son worked for one of the largest cabinet shops here in Oregon. He had health and dental. He asked for one day off a few months ago to do personal business. They said sure, go ahead. Then a month later, while getting his teeth fixed at the dentist, they handed him a bill. They said your employer canceled your insurance. He had to pay this bill, even though after 3 1/2 years of working for this shop he assumed he still had insurance and his deductible was paid up. Turns out he fell just shy of the minimum work hours for one week. He asked to get back on insurance and they said he could, but would have to wait until next year, as they only add new people on once a year. These guys are so big the federal government mandates they offer benefits. These are the same people who were reported in the paper to have tried to cheat Uncle Sam out of a million dollars in taxes due.

Try to get a job with someone who offers insurance; it's one of the few benefits you will ever get. Getting more pay to pay for your own insurance won't happen. Shops that carry insurance value your work, except certain very large cabinet shops in Oregon.



From contributor E:
I think all companies should offer health insurance. I also think the damn politicians should get off their asses and do something about the cost. Of course, they have cheap health care provided by yours and my taxes. But we also need disability insurance. Just think what would happen if a guy had to be off work for a month or two with, say, a herniated disc. It would devastate him. And would he still have health insurance if he can't make the premiums? I think everyone should have health and disability insurance. One way or another we will pay for it.


From contributor N:
Some health insurance companies require you by contract to not keep employees on that don't meet the minimum hours. This also keeps friends from getting on the plan. The employer must offer the employee COBRA so the employee can cover the premium when this happens. If they didn't offer cobra, then find out why not.


From contributor N:
We have had health benefits, disability insurance, profit sharing, 401k with matching to 5%, paid vacation, paid holidays, annual gifts (used to be bonuses) and safety awards for over 20 years.

Our current health insurance is an HSA account. We pay 100% of the premium and kick $500 into the employee's HSA account. An HSA is insurance, not an HMO, but the max out of pocket for an employee is $1500 and we are giving them $500 in advance to pay health costs. I am on the plan and I like it better than any insurance I have had in 20 years.

If you like where you work, you should price a plan and see what the cost per hour is; that will get you closer to seeing what the competition's rate is, then maybe you can get the employer interested.

We have about 25 employees. We want to attract and keep employees and good wages and benefits is how we try and do that. On average our benefit package equates to about 30% in additional income to the employee or 30% we could pocket.



From contributor L:
Three years ago we tried to find health insurance that made sense. We got pricing from three companies. We had decided we would pay 50% of the employeeís part. Then we sent two employees out to the same insurance companies to see what they could buy the same coverage for. It was 50% of what the group policy would have cost for that same employee! I went back to the insurance companies with my cost numbers. They agreed with the numbers, but said they had to have a much higher rate in a group because they were required by law to accept all new employees into the group, so they had a big exposure they had to cover.

We ended up giving fairly large raises to the employees and told them it was to be used to cover their own insurance. Didn't work - those without insurance didn't get it. A year later they didn't remember anything about why they had gotten a fairly large raise and wanted health insurance on top of the raise. All the information had been discussed at employee meetings and a summary posted on the board.

Another shop about the same size near here had a basic group policy. One of the employee's wives got cancer. At the next policy anniversary, their rates went up a lot and younger, healthy employees bailed out and got their own for cheaper than what their share in the group had been. The insurance company then raised the rates some more because the group was now more of a risk. Most group policies require a certain percentage of eligible employees participate in order to maintain the policy. When enough bail due to the high cost, the remaining have to go into the state risk pool at a very high rate. Screwed either way!



From contributor M:
We pay higher than average in our area by about 3%, sometimes more depending on the employee and the job. We have a company-provided HRA plan that runs (to the employee) $56-100/mo single male depending on age, $122-250/mo family. Company provides the first $1000 in coverage for the employee with no co-pay except prescription drugs. They cover the next $1000, then 100% coverage after that. We have a 401k with 100% match to 4% and have every employee but one participating. Decent dental plan, vision discount plan, optional life insurance, LTD, STD, etc. We offer one week paid vacation 1st year and two weeks paid vacation thereafter plus 9 or 10 paid holidays. We currently have 18 employees.

We value our employees and their wellbeing. Sick employees or those stressing about medical bills don't perform well and can be unsafe. In return we expect every member of our team to contribute. We have a policy regarding compensation, raises, etc. that the pay is commensurate with the value provided to the company. We have no patience for laziness, sloppy work, or a poor attitude, and fortunately have not had to deal with these problems on more than one occasion.

I have had at least three of my employees who were approached by a competitor listen to what he was offering and laugh in his face. In all three cases he was offering 10-15% above the rate we pay, but provided nothing else. My two most recent hires came from a large manufacturer in the area (250+). Both are extremely skilled in all aspects of machine setup/teardown/maintenance and commercial woodworking. At the company they were at, the insurance was garbage and overpriced, there was no 401k, vacation was limited, there was no room for advancement, and management never communicated to them how they fit into the process or anything positive about their work. I was able to pick them both up for 20% less per hour than we budgeted for the positions because of the value they saw in our total package. Both hit the ground running and immediately began paying for themselves with the skill sets they brought with them, and both tell their supervisor weekly how glad they are to be a part of the team.

I came from a background outside of woodworking and brought what standard practices we had to this business, i.e. when you have employees, you have a responsibility to assist them with more than just a paycheck. I am constantly amazed when I read responses like those above and come to realize the absolute lack of professionalism that plagues our industry. Itís bad enough to compete with the third world, now we have to worry about competing with the third world mentality in American companies. The excuse that we cannot afford health insurance is a copout propagated by politicians for their own gain and regurgitated without thinking by business owners far and wide. If you canít afford to take care of your employees, you canít afford the employees, so either get more productive or raise prices - really the only two options out there.



From contributor V:
Contributor J, do a search on FLSA or Fair Labor Standards Act. This is a set of federal laws that govern employment. In it you will find the qualifications of a "full time" employee. If memory serves me correctly, it is 32 or 33 hours a week. The reason for this part was that many employers would work employees just less than 40 and then deny them benefits, so the feds put this there. After working the required number of hours for the required period, the employee is legally considered "full time" and entitled to whatever benefits the company offers, if any. When you find that, you will also find the rest of the qualifications, and your son can print them out and go to the office, get his insurance reinstated, and probably have them pay what he had to pay because of their screw up. At the very least he should have been offered cobra by law.


From contributor G:
Contributor M, we offer similar benefits, however our health insurance is skyrocketing. I have thought about a HSA. Can you tell me the company who handles your policy? Also when you switched, how did the people handle the change, and can they go to any doctor? I suspect you changed for the same reasons and I would like to limit the increases more than saving current dollars if I can. Thanks.


From contributor N:
We have an HSA through Kaiser. The cost was about 30% less than a $30 co-pay HMO. The out of pocket max is the best - at $30 co-pay a family max out of pocket was $7500, with the HSA, after our contribution, it's a $2500, so no employee will be devastated financially by a major medical problem. The HSA is insurance, not maintenance (HMO), so a doctor visit is $65, but it comes off the HSA debit card.


From contributor M:
We actually have an HRA, not an HSA, and it is administered through United Health Care. We pick the amount we will pay for each employee and fund an account with a portion of that amount. They hit us as the company provided funds are depleted with a weekly draw. Everything else we pay for like normal insurance and hold from the employees per our policy with them. Employees receive a card that acts like a debit card against the money we allocate. Anything leftover at the end of the year (money we committed to spend but did not) is applied to pay down premiums the following year, so it benefits everyone to keep things under control.

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